Although the 30% tax on crypto assets has come into effect from April 1, and also 1% TDS will be deducted from crypto-assets starting July. (AFP)
As per CoinMarketCap data, the global crypto market cap is $1.96 trillion, a 2.05% decrease over the last day. The total crypto market volume over the last 24 hours is $69.34 billion, which makes a 15.15% decrease. Bitcoin’s dominance is currently 41.06%, a decrease of 0.07% over the day.
The tide in cryptocurrencies markets is keenly watched after India's stringent tax rules came into effect starting this month. The first full week of April turned bitter for crypto markets broadly. Bitcoin, Ethereum, Avalanche, Shiba Inu, BNB, and Litecoin among others have taken a steep downturn in the last seven days of trading. The new tax rules are seen to dampen investors' growth in the industry.
Although the 30% tax on crypto assets has come into effect from April 1, and also 1% TDS will be deducted from crypto-assets starting July.
Under the Finance Bill 2022, a 30% capital gains tax is imposed on crypto transactions. Further, a loss incurred during the transfer of the virtual asset will no longer be allowed to set off against any income calculated under the “other" provision of the IT Act as the word "other" has been removed.
Simply put, a loss from Bitcoin assets cannot be set off by income in Ethereum or any other virtual digital assets.
On Friday, Bitcoin is near $42,450. In the last 24 hours, crypto has tumbled by more than 2%. Broadly, the majority of cryptocurrencies have logged selling pressure. On the other hand, Tether, USD Coin, Binance USD, TerraUSD, and Dai have made marginal gains, while a crypto Monero surges even more than 5%.
As per CoinMarketCap data, the global crypto market cap is $1.96 trillion, a 2.05% decrease over the last day. The total crypto market volume over the last 24 hours is $69.34 billion, which makes a 15.15% decrease. Bitcoin’s dominance is currently 41.06%, a decrease of 0.07% over the day.
Meanwhile, in the past seven days, the CoinMarketCap data shows that the leader of the market, Bitcoin has nosedived by more than 8%. While Ethereum the second-largest crypto after Bitcoin in terms of market cap has plummeted by over 7%. Other cryptocurrencies like BNB dives nearly 5%, XRP slips over 9%, Solana plunged above 20.50%, Cardano shed over 11.5%, Terra dropped nearly 18%, Avalanche contracted nearly 17%, Polkadot fell by 15%, Shiba Inu declined over 9%, and Polygon slipped by over 14% among others. Broadly, crypto markets have been on a bearish tone these days.
But in these seven days, not all cryptocurrencies have faced selling bias, few held steady ground and even picked up momentum however at a slower pace. Tether was flat, Dogecoin surged nearly 2%, Near Protocol jumped nearly 8%, Monero soars over 7%, and Convex Finance zooms nearly 3% among a few others.
The start of April has led investors more towards profit booking than buying sentiments in the crypto markets recorded more profit booking.
Many factors have driven cryptocurrencies price movement this week.
From monetary policy tightening, stringent tax rules, soaring commodities prices to the biggest elephants in the room, geopolitical tensions, and global inflationary pressures concerns, all have played a part in swaying sentiments toward trading in virtual currencies.
Now, for example, let's take into consideration the last seven days of cryptocurrencies' performance. With the new tax rules in India, the traders cannot offset losses incurred in either Bitcoin, Ethereum, or XRP with the gains that have been recorded in Near Protocol and Monero.
Furthermore, from July, the traders will also pay 1% TDS on crypto assets as well, further adding to woes.
So how do the country's new tax rules impact traders?
Nischal Shetty, co-founder of WazirX said, "The proposed 30% tax, irrespective of whether crypto-assets are capital assets or not, will be detrimental to the investor growth that the industry has been seeing so far. This move will make day-traders incapable of saving on taxes even if they aren't in the income tax brackets currently. Furthermore, not allowing investors to offset losses from one crypto trading pair with gains from another type will further deter crypto participation and throttle the industry growth."
"We firmly believe that there is a need to regulate and tax crypto, but it is poised to do more harm than good in its current form. It will also fail to provide desired results for the government. It can result in cascading participation on Indian exchanges that adhere to the KYC norms and lead to a rise in capital outflow to foreign exchanges or those that aren't KYC compliant. This is not conducive for the government or the crypto ecosystem of India," Nischal added.
On the tax rules, Probir Roy Chowdhury, Partner, J Sagar Associates (JSA) says, "The Finance Bill seeks to impose a flat tax of 30% on cryptocurrency gains. While this would result in a 5% increase in tax payable by companies in trading in cryptocurrency, this would more significantly affect smaller ‘retail investors' who may be in lower tax brackets or have been relying on lower capital gains tax rates. The Finance Bill also imposes a 1% TDS on payments to Indian residents for cryptocurrency transactions. This TDS will result in a drop in liquidity, as the TDS would be imposed regardless of profit or loss. The volatility of many cryptocurrencies has created a burgeoning community of high-frequency traders, who will be significantly affected by the drop in liquidity on each trade."
Regulatory restrictions are seen as a barrier to crypto markets.
Source: mint
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